Current Analysis on
Economics & Finance

Research Article  |  Published 17 September 2019

Medium-Term Cycles: To What Extent do they Feature in the Booms and Busts in British and Irish Housing Markets?

David Paul Gray**

Department of Accountancy, Finance and Economics Lincoln International Business School, University of Lincoln, Brayford Pool, Lincoln, Lincolnshire LN6 7TS, UK.

Abstract

Using the Christiano-Fitzgerald filter to extract business and medium-term cycles, this paper considers house price and construction fluctuations in Eire, the UK and Northern Ireland. Taking the perspective of a multi-cyclical system, it is shown that the synchronisation of business and medium-term cycles is associated with the largest price events, generally. The UK is strongly associated with a financial cycle with smaller business fluctuations. Northern Ireland and Eire feature a strengthening medium- term cycle, consistent with global financial liberalisation. The business cycle amplitude, of comparable size, also escalates. What is shown is that there are construction cycles in the medium-term range complementing price cycles, adding credence to the claim that that stabilisation policy should look beyond the relatively short-term business cycle to avoid significant housing crises.

Keywords:
Christiano-Fitzgerald filter, Business and Medium-term cycles, Housing booms and busts, Eire, the UK, Northern Ireland

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